Businesses operate by taking in payment and rendering goods and services. A lot of the buzz in modern business publications focuses on online sales. This isn’t surprising. More people shop online every day. Online sales enable people to have access to goods and services that would otherwise be unavailable to them.

But that doesn’t mean that people don’t shop in brick-and-mortar stores anymore. In fact, there’s been a resurgence of brick-and-mortar small businesses that deal in specialty products and services. These businesses may or may not operate online. However, to do business in person, they need to be able to accept electronic payments.

In the past, businesses used cash registers to check out customers. Today the process is similar. However, there’s one important difference. Instead of using cash registers, modern businesses use point of sale systems.

This article covers the basics of what a point of sale system is. We’ll look at the hardware and the software that go into making these systems work. We’ll also help you answer the question of whether or not you need a point of sale system for your business. Finally, we’ll provide you with the questions you need to ask to get the best point of sale system.

What is a Point of Sale System?

A point of sale system is a combination of hardware and software. Businesses use point of sale, or POS, systems to conduct transactions with customers in their stores. But a modern point of sale system does much more than simply act as a cash register.

In order to get the best idea of how these systems work, it’s important to understand that there are two main parts. Point of sale hardware and point of sale software. Each of these parts plays a vital role in helping your business take in money for the goods or services you provide.

Point of Sale Hardware

The hardware for a point of sale system is the physical device or devices you use to conduct a sale. This could take the form of a specialized terminal, like you see at a grocery store. It might also come in the form of a tablet or smartphone, like you might see if you buy something from a boutique or food truck.

The hardware acts as an interface between the merchant and the point of sale software. It lets cashiers and clerks enter information about the products being purchased. It also displays important information about the transaction. This lets the clerk and the customer ensure that the transaction is rung up and totaled properly.

Point of Sale Software

Point of sale software is a very broad term. As we’ll see in a bit, there are many things that a point of sale system can do. The different capabilities of a given system depend on the software that it runs.

Some point of sale software is designed to be used with a specific, and usually specialized, terminal. Once again, grocery stores are a great example of this. The software in the point of sale system reads the bar codes on products and recalls their price. It adds that price to generate a subtotal before the customer finishes checking out.

That’s not all though. Grocery stores often sell things by weight. Point of sale software in most grocery stores take information from a scale and an item number entered by the clerk to determine how much to charge a customer. This shows only a fraction of the things that POS software can do.

Modern POS systems have lots of other functionality. They can help with things like scheduling, inventory management, real-time analytics, and more. Therefore, it’s important to understand what your business needs to grow before you purchase a POS system. Some businesses may not even need one.

Do I Need a Point of Sale System?

There are some businesses that won’t need a point of sale system. In fact, for some businesses, a POS is a waste of resources. Mostly, these are businesses that operate entirely online. That’s because your website, payment gateway, and digital shopping cart perform all the tasks of your point of sale system.

Another example of businesses that don’t need a point of sale system are those that invoice for their services. If your business sends invoices, then you don’t need a POS. This is because your customer isn’t paying when they get your goods or services, but when the invoice is due. That changes the way that you collect money, and thus changes the way that you process sales.

An example might be a lawncare business. This type of business sends workers to take care of a client’s lawn. Rather than directly paying the workers, the client receives a bill or invoice that they pay. In this situation, there’s no point of sale. That means there’s no need for a point of sale system.

However, most brick-and-mortar stores need a point of sale system. If your business has a physical location where customers come to buy goods or services, then a POS is probably a necessity. The alternatives are either to only accept cash or use archaic ways of processing card payments. Both of these options limit your sales and can make your business seem sketchy.

Finding the Best Point of Sale Systems

There are several things you need to consider when looking for the best point of sale system. First, you need to keep in mind that the cheapest point of sale might not be the one that saves you the most money.

The other thing you need to consider is your business’s particular needs. For example, if your business has a mobile aspect, like a food truck or exposition sales group, then you’ll need a mobile POS.

Another thing to consider is your other merchant service needs. Many merchant service companies offer a POS as part of a package deal. They want you to use them for payment processing, payment gateways, merchant accounts, and your POS. They’ll offer benefits for using their company for all of these services.

However, these benefits may or may not help your business. We’ll look more closely at this situation under the Needs section.

Finally, you should determine the best combination of merchant services based on the total number of transactions it will take you to pay for the services. There are a few reasons for this. First, companies price their services and POS systems differently. That can make it harder to do an apples-to-apples comparison.

Second, this method will allow you to evaluate whether different packages of services are better for your company than getting all of your merchant services from different sources. That’s because it lets you evaluate the total cost of merchant services. This lets you make a fair comparison as to how different options affect your bottom line.

That being said, there are three primary things you need to consider when selecting a POS. The terms, your needs, and the features offered. Getting a handle on these three things will go a long way towards helping you decide what the best POS is for your business.


The terms of your agreement are vitally important to figuring out the best option for your business. For example, some companies lease you the software and hardware. This can come with early termination fees. It can also prevent you from upgrading to a better option. Moreover, you might be forced to pay out the lease for a system you’re no longer using.

Other companies will stack in hidden fees. These fees dramatically increase the cost of your POS and merchant services. These companies don’t always list all of their fees on their websites. That means you’ll have to call or email them to get an exact description of what their services will cost your company.

The best POS agreements will have flexible terms. They’ll let you upgrade to newer systems and won’t have early termination fees. Moreover, for many companies it may be cheaper to buy your equipment rather than leasing it. A lot of this depends on your tax situation and the state of your books. Buying the equipment lets you write off the depreciation, whereas leasing it lets you write off the cost of the lease. Your accountant will be able to tell you which option is most advantageous for your tax situation.


The next thing you should consider is your needs. Are you the business’s only employee? Do you have other employees? How many sales do you do a day? What kind of image are you trying to cultivate for your store? After all, it’s hard to give the appearance of a sleek and modern design with a clunky POS terminal sitting on a desk.

You’ll also want to determine if you need mobile POS options. Some brands benefit from a look that doesn’t have a static POS in the store. Instead, customers talk to sales reps who can take payment directly through a mobile POS device.


One of the biggest reasons you need to determine what your needs are is so that you can pick a POS with the right set of features. For example, if you have other employees, then you might want a POS with scheduling and payroll functionality. These systems let employees clock in and clock out directly from the POS device. It records their time and exports it to yourself or your payroll service. This makes keeping track of payroll needs easier.

In the same way, many POS systems come with scheduling software. This lets you make sure your staffing needs are covered. It also helps you manage your employees’ hours and your business’s needs from a single, centralized location. This saves you time and energy, allowing you to focus on growing your business.

That’s not all modern POS systems can do. Many of them offer things like rewards programs. If your business model depends on repeat customers, then you might consider a rewards program. After all, studies show that these programs are effective at encouraging customer loyalty and repeat business. Tracking customer rewards points through the POS simplifies the process and helps prevent disputes.

Modern POS systems also give you a lot of options when it comes to managing and understanding your business. One way that they help you manage your business is through inventory tracking. They can help you know when certain products are running out so that you can order more. They can tell you when products aren’t selling so you can lower the price or cancel an order to get more of them.

POS systems help you understand your business by enabling powerful analytics. They act as a centralized point to collect information about your business and how it’s running. For example, your POS might generate a report that tells you only 3% of your sales happen between 9am and 10am. You can take that information and decide if you should open later so you can save money on labor and overhead.

Getting the right mix of POS features is essential to ensuring your business runs as efficiently as possible. However, you’ll have to decide what features work best for your business based on how it operates. For example, a used car dealer probably doesn’t need a rewards program. After all, most customers aren’t going to be buying a new car all that often. In the same way, if you run a store with your spouse and have no other employees, then you probably don’t need scheduling software.


Running a business is no easy thing. A point of sale system can help your business be as efficient as possible. However, you’ll need to determine your companies needs to pick the right POS. This guide should help you understand what questions to ask yourself when it comes to making the right choice. Use this information to help ensure that you’re getting the greatest value for your money. You should also use it to make sure that you’re not paying for systems or features that you don’t need.

See also  Payment Processing